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The Ministry of Defence (MoD) said an announcement would be made in due course, but The Times reports the body has recommended an increase of about 3%.

The Government announced in September that it was lifting the 1% public sector pay cap, which has been in place since 2010.

However, an announcement on how armed forces pay may change was delayed.

Mr Ellwood, a former Army captain, told The Times that while people do not join the armed forces “for the money as such”, pay must not become a reason “as to why they would be deterred from it”.

He added: “There needs to be a pay rise. We have still got to conclude the defence modernisation programme but you would need to move north of 2.5% to make any of this work, if you want to retain the same defence posture given the dangers, the complexities of the world that we face.”

Mr Ellwood has previously suggested the armed forces should receive funding on a par with the NHS.